Medicare Part D In Massachusetts: Successes and Continuing Challenges Cindy Parks Thomas Massachusetts Health Policy Forum May 30, 2007
2 I. Overview and Massachusetts Part D Landscape
3 Medicare Part D: Overview Voluntary drug benefit implemented January 1, 2006 Prescription drug coverage through private drug plans (PDP) and Medicare Advantage (MA-PD) integrated health plans Standard drug benefit or at least equivalent Medicaid dual eligibles autoenrolled into private drug plans State maintenance of effort ( clawback ) payments to CMS Subsidy to employers to maintain coverage Extra assistance for low income beneficiaries, based on income and assets Formularies and other drug management techniques used by drug plans
Medicare Part D 2007: Prescription Drug Standard Benefit Enrollee Pays 5% Plan Pays 95% $5,451 in Total Rx Costs Enrollee Pays 100% $3,051 Coverage Gap Enrollee Pays 25% Plan Pays 75% $2,400 in Total Rx Costs $265 Deductible $328 National Average Annual Premium Source: Kaiser Family Foundation 4
5 Extra Help Provided Through the Low Income Subsidy (LIS) Dual Eligibles: No premium, No deductible Copayments: Nursing home residents: No copayments Individuals below poverty level: $1 / $3.10 Individuals above poverty level: $2.15 / $5.35 Income < 135% of Poverty ($13,000/individual) / Resources <$6,120: No premium, No deductible Copayments: $2.15 / $5.35, up to catastrophic only Income <150% of Poverty ($14,000/individual) / Resources <$10,210: Sliding-scale premium / $53 deductible 15% coinsurance up to catastrophic Copayments: $2.15 / $5.35 after catastrophic
6 The Massachusetts Part D Landscape, 2007 51 Private drug-only plans (PDP) 15 Benchmark (available for dual eligibles) Average monthly PDP premium: $34.40 Premium range: $13.40 - $87.40 No plans with full coverage in gap, 15 with generic coverage 43 Medicare Advantage prescription drug plans 10 sponsors Up to 19 choices in Middlesex county Drug-only premium range: $10.30-$58.50 Total monthly health plan premium range: $0-$182 Direction of change: higher premiums, more choices
7 Part D Prescription Drug Plan Premiums in Massachusetts, 25 2006 and 2007 Number of plans offering premiums in category 20 15 10 5 2006 2007 0 $0- $10 $10-20 $20- $30 $30- $40 $40- $50 $50- $60 $60- $70 $70+ Monthly premium
8 Massachusetts Prescription Drug Plan (PDP) Examples, 2007 Monthly Premium $13.40 (Lowest) Deductible Cost sharing By tier Gap coverage $265 $2/ 34%/ 34%/ 25% No $35.00 $0 $5/ $20/ $52/ 25% No $35.40 $100 $5/ $34/ 75%/ 30% No $87.40 (Highest) $0 $5/ $30/ $60/ 25% Generics
9 II. Part D Enrollment in Massachusetts
Part D Enrollment in Massachusetts, 2007 (1 Million beneficiaries) No identifiable coverage 12% Other creditable 10% Federal retirees 5% MA-PD (non-duals) 14% Source: Based on CMS 2007 national and state data Dual eligibles 20% Employer plans 20% PDP (non-duals) 19% 10
11 Enrollment Activities Coordinated by CMS, but independent 400 partners in Massachusetts actively educated and enrolled beneficiaries Examples: VA, HUD, HRSA, providers and associations, drug plans, hospitals, pharmacies, MassHealth, Mass Bar Assoc, Assoc Industries of Mass SSA approved applications for LIS SHINE program held about 1000 training sessions; 57,000 one-on-one counseling sessions Prescription Advantage required each member to apply for LIS Employers contacted each member directly
12 Enrollment Successes Nearly 90 percent of beneficiaries now with drug coverage in Commonwealth Transition for many appears smooth High participation compared to other voluntary federal programs Considerable choice of coverage Medicare costs are lower than predicted Overall satisfaction with plan on surveys
Coverage Challenges Remain for Low Income Beneficiaries in Massachusetts Massachusetts Part D LIS application status as of December 29, 2006 Income/eligibility category Number of applications processed (excludes deemed beneficiaries) Number of beneficiaries 102,934 Number qualifying for LIS 37,634 (36.6%) Number not qualifying for LIS 65,300 (63.4%) Number potentially eligible for LIS* 113,000 Number potentially eligible for LIS and not receiving it 75,336 *Source: ABC Coalition, 2005 13
14 Continuing Challenges: Part D Program and Systems Accessing medications at the pharmacy Data systems still evolving Burden on pharmacies Problems with premiums being deducted from SSA checks New beneficiaries/ changing status Timing gap until beneficiaries recognized as enrolled Special populations with difficulties in enrollment and participation Minority Mental health Disabled
Updated 9/29/2006 Deemed, LIS, Enrollment, COB Transactions Claim & E1 Eligibility Transactions Medicare Eligibility Employers Bene IEQs Primary Claim-Direct Connect -OR- Payers Enrollment Files OHI Info Pharmacy Primary Claim Part D Plan Medicare Eligibility Enrollment Files LIS Elig. and SSI Deemed SSA E1 Eligibility Query available to pharmacies COB Contractor COB/OHI Part D, LIS, Deemed, etc. Dual Elig. SMAs Second Claim Part D Plan Submits 4Rx RxBIN, RxPCN, RxGRP, RxID Deemed + Part D Enrollment Claims Router Claims Router Claims Router Third Party Check Elig / Entitlement MBD Enrollment Recorded Autoassignment Part D Enrollment Records with RxBIN, RxPCN, RxGRP, RxID Primary, Secondary + Medicare A/B Eligibility TrOOP Facilitation N Transaction Plan Updates COB/create COB inquiry - use ECRS or equivalent Flat File submission Part D Plan Plan Change Transaction Enrollment Transaction Batch Completion Status Summary Report (24-48 hours after file submission) TRRs Weekly- Monthly; Monthly Reports MARx COB Record parsed by Contract/PBP Copies of N DDPS Part D Plan = PDPs and MA-PDs N=NCPDP information Tx carrying TrOOP Amt Secondary Payer(s) PDE Secondary Payers create Ns to TF in certain situations NCPDP Rx Transaction Representation Solid = Request transaction Dashed = Response transaction 15
16 Continuing Challenges: Design of the Benefit Complex program: Information needs are ongoing Members need to reassess plans annually Surprise cost sharing Formulary management and drug substitution Appeals process through plans Changing market Increased premiums Changing choices Employer coverage
17 III. Impact of Part D on Massachusetts Health Programs MassHealth Prescription Advantage State Retirees Health Program
18 MassHealth Dual Eligible Beneficiaries 200,000 dual eligibles autoenrolled into Part D plans Part D drug coverage implications Formulary management, appeals Coordination of medical and drug benefit Cost sharing Annual reassignment as plans change and eligibility changes Data systems Nursing facility coordination of pharmacy services Medicaid waiver (Senior Care Options) population and program challenges
19 Emergency Coverage for Duals for Part D Medications (Chapter 175 of 2005 Acts) Jan 1-March 15, 2006: CMS reimbursed $17.5 million in emergency coverage March 16, 2006- December 31, 2006: $4.6 million for 200,000 claims and copayments 30-day emergency supplies has expired, 72- hour still in place Continued need for 30-day supplies?
Estimated Impact of Part D on MassHealth Budget Part D changes Budget impact of Part D, $$ in millions FY07 Spending impact: No Part D Part D Net FY 07 cost impact Dual eligible pharmacy cost $722.25 0 ($722.25) Clawback payment 0 $238.6 $238.6 Spending impact $722.25 $238.6 ($483.65) Revenue impact: FFP from dual eligibles $361.125 0 ($361.125) Manufacturer drug rebates $101.115 0 ($101.115) Revenue impact $462.24 0 ($462.24) Net projected impact FY07 ( )=savings $260.01 $238.6 ($21.41) Source: MassHealth, 2006 Estimated FY06 impact: ($25.56) 20
21 Prescription Advantage 70,000 members Program now fills in coverage gaps around Part D; income-related benefit Members randomly assigned to drug plans in 2006 Focused outreach to identify LIS-eligible beneficiaries Members maintained cost sharing levels
Estimated Budgetary Impact of Part D on Prescription Advantage Fiscal Year Enrollment Estimated Budget 2005 78,397 $115 million 2006 72,992 2007 71,003 $96 million (1/2 year of Part D) $64 million Source: Prescription Advantage, 2007 22
23 Overall Estimated Budget Impact of Part D on Mass Health Programs Program MassHealth Prescription Advantage State retirees Other programs Total Savings Estimated first-year Part D savings (based on FY 2006 and FY 2007 program estimates) $21-25 million $20-50 million $21.5 million $10 million $72.5-102.5 million
24 IV. Ongoing Challenges and Lessons for Other State Health Programs
25 Future Programmatic/ State Concerns 125,000 still without coverage 75,000 LIS-eligibles still without extra help Ongoing difficulties at point of service, appeals Employer drug coverage Still segments of beneficiaries needing financial and other assistance MassHealth Formulary management Clinical management for most vulnerable Monitor clawback
26 Monitoring the Part D Market in Part D plans Massachusetts Changing availability, concentration, premiums, cost sharing Pharmacy networks and access Employer based coverage Medicare Advantage growth Impact on providers and on pharmacies
27 Lessons for Implementation of Other State Health Programs Pre-implementation coordination Choice Ample testing of data systems Sufficient safety net features Flexible and extended transition period Needs of low income and minority populations